On February 20, the U.S. Supreme Court overturned many of President Donald Trump’s tariffs enacted throughout the past year. The court ruled that President Trump overstepped his authority by attempting to use the International Emergency Economic Powers Act (IEEPA) to declare tariffs without approval from Congress.
As a result, all tariffs declared under this act have been overturned, including the global reciprocal tariffs enacted in August 2025 and tariffs on Canada, Mexico, and China that were imposed in response to alleged illicit drug imports.
Previous 50% tariffs on Brazil and India that were declared under the IEEPA have also been revoked. Tariffs enacted under separate legal authorities have not been affected, including nearly all product or industry-specific tariffs on goods such as steel and aluminum products and pharmaceuticals.
The Supreme Court ruling has dealt a significant blow to President Trump’s trade agenda; however, the president plans to utilize separate legal authorities to formulate new tariff policies comparable to his previous measures.
Using Section 122 of the 1974 Trade Act, President Trump announced a new global 10% tariff affecting all trade partners. Although he later promised to increase the rate to 15%, the tariffs were ultimately enacted at a 10% rate from 00:01 Eastern Standard Time on February 24.
The only countries that have been exempted are Canada and Mexico due to the U.S.-Mexico-Canada trade agreement. Additionally, previously announced exemptions for select agricultural products will continue. According to White House statements, the tariffs will be officially raised to 15% at an unspecified date.
Due to limitations of Section 122, these new tariffs will be capped at 15% and will only remain valid for a maximum of 150 days, or until July 24, without Congressional approval to extend the measures. This approval is considered unlikely due to the unpopularity of tariffs in some jurisdictions represented by Republicans, who currently hold the legislative majority by a slim margin.
Trump administration seeks alternative legal pathways to enact permanent tariffs
President Trump has announced his intentions to replace the Section 122 tariffs with similar measures declared under more permanent legal authorities.
U.S. Trade Representative Jamieson Greer has already announced the administration’s intent to use Section 301 of the Trade Act of 1974 to initiate investigations into multiple countries. Under this law, the U.S. Office of the Trade Representative (USTR) can instigate tariffs by launching formal investigations into allegations of discrimination against U.S. businesses or violation of U.S. rights under trade agreements.
In an official statement, Greer indicated the USTR will use the law to investigate excess industrial capacity affecting U.S. trade with unspecified Asian countries that “make more than they can consume” with the intent of restoring tariffs on these nations.
Other USTR Section 301 investigations will focus on forced labor, pharmaceutical pricing, discrimination against U.S. tech companies, ocean pollution, and unfair trading practices for seafood and rice as justifications for restoring other tariffs. These investigations will occur on an accelerated timeline of an unspecified length.
Additionally, the Trump administration plans to use the Section 232 pathway to expand sector-specific tariffs. This law allows the U.S. Department of Commerce to initiate investigations into the trade of specific goods designated as threatening national security.
While the law would not allow President Trump to restore sweeping tariffs on all imports from one nation, the administration could turn to further product-specific tariffs as an alternative means to enacting previous trade policies. Initial sources indicate that President Trump intends to utilize this authority and that early investigations could focus on batteries, cast iron and iron fittings, electrical grid equipment, telecom equipment, plastics and plastic piping, and industrial chemicals.
However, both of these options require approval by other governmental agencies, increasing administrative red tape for President Trump’s tariff agenda. While the precise duration of the investigation process varies, previous investigations have taken around six months at minimum.
Although these organizations are headed by officials appointed by President Trump and will likely push to approve most of his new tariff proposals, President Trump’s authority to unilaterally and immediately enact tariffs has been restricted.
Compared to the rapid tariff changes prior to the Supreme Court ruling, new tariffs resulting from USTR and Commerce Department investigations could lead to more advanced notice of potential trade restrictions and greater opportunities for negotiations prior to policy enactment.
Court ruling leads to confusion about status of previous trade deals and tariff bill refunds
It remains unknown how the Supreme Court decision will affect the implementation of trade agreements previously negotiated by President Trump’s administration. While many of these agreements established U.S. tariff rates that have been directly changed by the ruling, they also contain investment and purchase pledges that have been unaffected by the decision. To intensify pressure on countries considering departing from previous agreements, President Trump has threatened to raise tariffs by an unspecified amount on countries that “play games” with existing agreements, although the mechanism by which he could do this remains unclear.
Leaders from most countries have so far declined to make a formal decision on whether they will continue to move forward with established trade deals, choosing instead to wait until more clarity on U.S. tariffs is established.
The European Union has officially paused its efforts to formally approve the U.S.-E.U. trade agreement, although Maros Sefcovic, the E.U.’s Commissioner for Trade and Economic Security, confirmed plans to move forward with ratification in March if sufficient information is provided.
While the Indian government has not announced an official position on the ruling, Indian officials have indefinitely delayed a previously scheduled visit to the U.S. which would have finalized the U.S.-India trade agreement.
The governments of South Korea and Cambodia have indicated they plan to move forward with current agreements despite the ruling due to many of the investment terms being unaffected by the decision.
Other countries that have already signed and finalized trade deals, including Japan and Indonesia, will likely be forced to follow through with these commitments regardless of the outcome of future tariff plans.
In future trade talks, President Trump’s inability to immediately enact tariffs may prove to weaken the U.S. negotiating position. The decision is especially likely to change the outcome of U.S.-China trade talks since the U.S. is no longer as capable of enforcing high tariff threats. China could respond by reneging on some of its previous pledges, including promises to purchase U.S. agricultural, aerospace, or energy products. President Trump is scheduled to visit China for a trade summit on March 31 for further discussions.
Additionally, one remaining question is whether the U.S. government will issue refunds of the $133 billion (€113 billion) in IEEPA tariffs already paid by companies. The Supreme Court deferred rulings on if and how refunds should be paid to lower courts. As a result, over 1,500 companies have already filed lawsuits requesting refunds. Litigation in smaller courts could last for months or years, delaying the payout of refunds indefinitely. It is also unknown whether the Trump administration plans to challenge the payment of refunds in court, which could further prolong the refund process.
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